Taiwan’s biggest insurers posted a total loss of NT$18.7 billion in April due to currency volatility after US President Donald Trump warned of a wave of global trade tariffs.
The insurers suffered the the worst shortfall for a single month in 1 1/2 years, Taipei-based Economic Daily News reported. Among the six biggest, Nanshan Life Insurance Co. posted the largest loss at more than NT$9 billion. KGI Life Insurance Co. was the only one among the largest to avoid a hit.
The big shortfalls came even before the Taiwan dollar’s spike in early May against the greenback, which raised concerns about the industry’s hedging and investment strategies.
Cathay Life Insurance Co. had a loss of NT$2.57 billion in April due to higher hedging costs, Cathay Financial Holding Co. said in a statement. Fubon Life reported a net loss of NT$2.41 billion, citing volatile global financial markets due to US trade policies.
The losses add to evidence that the island’s life insurers may be over-exposed and under-hedged relative to their US dollar investments. The Taiwan dollar jumped over 6% in the first two trading days of May, effectively reducing the value of unhedged US dollar investments, leading the Financial Supervisory Commission to offer assurances on May 6 that no insurers have had solvency issues so far.
The central bank the same day announced it would inspect banks to ensure that fund inflows are for investment, not currency speculation. The Taiwan dollar has since stabilized.
Fubon Life said it has increased its hedging to mitigate the impact of currency impact of Taiwan dollar gains, and said it would closely monitor the market and dynamically adjust its hedging to handle currency risks.
Cathay Life, which had its first monthly loss since 2024, said hedging costs rose last month, but the impact is controllable.
Goldman Sachs Group Inc. analysts said in a May 8 note that a 10% appreciation of the Taiwan dollar against the greenback could lead to around $18 billion of unrealized currency losses for local insurers, who hold about $710 billion of foreign currency assets.
Such a move would wipe out the roughly $6.6 billion reserves insurers have for currency volatility, the Goldman analysts wrote.
With assistance from Adrian Kennedy.
This article was generated from an automated news agency feed without modifications to text.
